Timeliness, Transparency of Information Disclosure, and Corporate Fraud
Date Issued
2010
Date
2010
Author(s)
Huang, Sin-Bo
Abstract
Prior researches on corporate fraud often discuss the issue from the viewpoint of corporate governance. However, this study discusses in a new aspect, examining the relationship between financial report timeliness, the transparency on voluntary disclosure in the annual report, and corporate fraud.
I use data on the two main news databases in Taiwan from 2004 to 2009, search out stories related to financial statement fraud and asset misappropriation, and identify these companies as my fraud sample. Mean difference test and logistic regression are used to conduct my empirical analyses.
My results support that the timeliness on issuance of the semi-annual reports is inversely related to the probability of fraud. I also find that the relationship between the transparency on voluntary disclosure in the annual report and fraud is positive. My additional analyses also find similar results.
My results imply that the difference between the hypothesis and empirical results on voluntary disclosure may arise from that the indicators used in this study cannot appropriate distinguish the behaviors of managements with and without integrity, which suggests that regulatory authorities may reconsider the design of disclosure indicators to reflect the transparency of information disclosure.
Subjects
Fraud
Timeliness
Transparency
Voluntary disclosure
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